Lisa99
Thinks s/he gets paid by the post
- Joined
- Aug 5, 2010
- Messages
- 1,440
DH and I are in a REIT private partnership that is now closing out.
We received our first check today from the partnership close out and I'm a bit confused by the annual report that accompanied the check.
Using hypothetical numbers here is what occurred:
1. We put $50k into the partnership in after tax dollars (the money isn't in an IRA).
2. The $50k is now worth $75k.
3. We received a check for $35k along with a letter from the partnership saying that this check represented the largest capital gains that we'd have. Next year we would receive a check as well but the capital gains would be less.
My question: is capital gains on a K-1 partnership front loaded? Meaning that $25k of the $35 is all capital gains rather than a return of capital?
When we sell Vanguard shares we only pay capital gains on the gains so I want to make sure I understand why any of the $35k would be subject to capital gains since our principal hasn't been fully returned yet.
We received our first check today from the partnership close out and I'm a bit confused by the annual report that accompanied the check.
Using hypothetical numbers here is what occurred:
1. We put $50k into the partnership in after tax dollars (the money isn't in an IRA).
2. The $50k is now worth $75k.
3. We received a check for $35k along with a letter from the partnership saying that this check represented the largest capital gains that we'd have. Next year we would receive a check as well but the capital gains would be less.
My question: is capital gains on a K-1 partnership front loaded? Meaning that $25k of the $35 is all capital gains rather than a return of capital?
When we sell Vanguard shares we only pay capital gains on the gains so I want to make sure I understand why any of the $35k would be subject to capital gains since our principal hasn't been fully returned yet.